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Europe Fines Nintendo $147 Million for Price Fixing

The European Commission fined Nintendo, the Japanese video game maker, $147 million today for colluding with seven European distributors to fix prices on its products.

In a statement, the commission said that Nintendo had organized a cartel that lasted from 1991 to 1998 and allowed the company to keep prices for its games and game consoles artificially high in some countries. The distributors agreed not to sell the products to buyers from other European countries.

As a result, the commission found, differences in prices from country to country were extraordinarily large. By 1996, it said, Nintendo game consoles cost about three times as much in Spain as they did in Britain, Germany or the Netherlands.

''European families have the right to buy the games and consoles at the lowest price the market can possibly offer, and we will not tolerate collusive behavior intended to keep prices artificially high,'' Mario Monti, the European commissioner for competition, said today.

Nintendo said that it was surprised by the size of the fine and that it would appeal.

One of the distributors involved in the case is John Menzies of Edinburgh. In an April 1996 memorandum to Nintendo, which was released by the commission today, Menzies officials laid out the strategy and methods of maintaining the huge price differences for Britain, the most competitive market, and other national markets on the Continent.

''We can, by working closely together, find a much better way of isolating our products and our prices to within the shores of the U.K., thus reducing the impact that this differential pricing has upon mainland Europe,'' the Menzies' memorandum said.

During the commission's investigation, Menzies gave it the memorandum to win a reduction in its penalty for the role it played in the matter. Even so, Menzies was fined $8.5 million today, more than the other six distributors combined, because it worked the most closely with Nintendo, the commission said. Menzies also ''tried to mislead the commission with regard to the real scope of the infringement'' in the early stages of the inquiry in mid-1997, the commission said today.

The chief executive of Menzies, David J. Mackay, said the fine was disproportionately large. ''We feel that the European Commission has not fully recognized, in the level of this fine, their earlier acceptance that this was a mistake, not a deliberate transgression,'' he said.

Menzies also accused the European Commission of undermining the company's right to defend itself by altering the accusations against it during the course of the investigation. The ultimate ruling in the case, the company said, was partly based on ''assertions which were not included in the statement of objections issued in April 2000, and which the company has therefore not been able to refute.''

The commission's antitrust decisions in merger cases have run into trouble in European Union courts on similar grounds, most recently its decision to block a merger between two French electrical goods companies, Schneider and Legrand. The Court of First Instance overruled the decision last week, in part because the commission's rationale for blocking the deal did not match the objections it raised in its inquiry.

Menzies said that it, too, is considering lodging an appeal of today's ruling and fine against it. The company stopped distributing Nintendo products in December 2000 and quit the game business altogether last year.

The other distributors fined in the case are the Greek unit of Itochu, a Japanese company; Linea GIG of Italy, Concentra of Portugal, Bergsala of Sweden, Nortec of Greece, and CD-Contact Data of Germany.